Yesterday to much fanfare and anticipation by the White House, the President released a draft proposal of what he wants to see in a tax bill that he wants enacted into law. Stung by the inaction or inability of the Senate to get anything done on his other signature issues, President Trump desperately seeks a big win to show that his agenda is on the move.
Now I like Trump, but listening to his rosy description of what is being proposed, I am reminded of the first rule ever learned by a salesman: "Under promise but over deliver". Sadly, I think the proposal is likely to miss that mark if for no other reason than the Senate is sure to try and put a monkey wrench in the entire thing based upon direction of their masters, the lobbyists. But there is really another reason and it's that Trump is the eternal optimist, which is fine, but he's surrounded himself of late by yes men who are likely to sell him a bill of goods as was the case in his endorsement of Luther Strange, a man that most in Alabama and others who follow politics from outside the Beltway knew was going to lose.
But let's get back to the tax proposal which has some good things and some not so much. Ending the inheritance tax and the elimination of the alternative minimum tax are two ideas that are long past due as is the reduction of the corporate tax rate, although I would have preferred the fifteen percent rate to the now proposed twenty-percent. America's business tax rate, actually just a pass through to purchasers in reality, is currently the highest in the free world and it makes us very non-competitive on the international scene. And the added simplicity for filers is also a positive feature, although I still prefer the much more aggressive fair tax approach which would do much to put our individual destiny in our own hands by eliminating the IRS. The proposal is, however, positive from the standpoint of starting such a direction although it has lots of questions.
Speaking of the questions, it's impossible to evaluate the impact of reducing the seven brackets to three and how it impacts the lower and middle class taxpayer without knowing what the bracket dollar values are. For example, the increase from ten percent to twelve percent despite the proposed doubling of the standard deduction could prove to be an issue. If the bracket kicker point is lower, with elimination of the personal exemption (that's in the bill) and the increased bracket percentage, taxes could in fact go up rather than go down, even in a lower bracket. And there's one other important thing that should be addressed.
Personally, I have a big problem with double tax on any money that was earned by a citizen. Once the tax is paid, those basic dollars should be left alone, so why do we keep the tax on social security benefits which was initiated by, of all people, President Reagan in 1986. That is an abomination and it's particularly bothersome in times when Congress tries to continually reduce payments to elderly of fixed income means. If you haven't noticed the steady creep of inflation despite the government decreeing otherwise, you just aren't facing reality yet the rate to pensioners has hardly moved in years. Don't you wish Congress used that same approach with regard to it's own compensation?
The point I'm trying to get across is that the bill has some good and some bad, so when you evaluate it, do your own research and don't limit yourself to what the nightly news or the headlines say. If not, you'll be surely surprised by the ultimate outcome although, with the Congress we have today, by the time Congress finishes with it, it may look like Swiss cheese and be hardly recognizable. I'll give the President and E for effort subject to the outcome.
Now I like Trump, but listening to his rosy description of what is being proposed, I am reminded of the first rule ever learned by a salesman: "Under promise but over deliver". Sadly, I think the proposal is likely to miss that mark if for no other reason than the Senate is sure to try and put a monkey wrench in the entire thing based upon direction of their masters, the lobbyists. But there is really another reason and it's that Trump is the eternal optimist, which is fine, but he's surrounded himself of late by yes men who are likely to sell him a bill of goods as was the case in his endorsement of Luther Strange, a man that most in Alabama and others who follow politics from outside the Beltway knew was going to lose.
But let's get back to the tax proposal which has some good things and some not so much. Ending the inheritance tax and the elimination of the alternative minimum tax are two ideas that are long past due as is the reduction of the corporate tax rate, although I would have preferred the fifteen percent rate to the now proposed twenty-percent. America's business tax rate, actually just a pass through to purchasers in reality, is currently the highest in the free world and it makes us very non-competitive on the international scene. And the added simplicity for filers is also a positive feature, although I still prefer the much more aggressive fair tax approach which would do much to put our individual destiny in our own hands by eliminating the IRS. The proposal is, however, positive from the standpoint of starting such a direction although it has lots of questions.
Speaking of the questions, it's impossible to evaluate the impact of reducing the seven brackets to three and how it impacts the lower and middle class taxpayer without knowing what the bracket dollar values are. For example, the increase from ten percent to twelve percent despite the proposed doubling of the standard deduction could prove to be an issue. If the bracket kicker point is lower, with elimination of the personal exemption (that's in the bill) and the increased bracket percentage, taxes could in fact go up rather than go down, even in a lower bracket. And there's one other important thing that should be addressed.
Personally, I have a big problem with double tax on any money that was earned by a citizen. Once the tax is paid, those basic dollars should be left alone, so why do we keep the tax on social security benefits which was initiated by, of all people, President Reagan in 1986. That is an abomination and it's particularly bothersome in times when Congress tries to continually reduce payments to elderly of fixed income means. If you haven't noticed the steady creep of inflation despite the government decreeing otherwise, you just aren't facing reality yet the rate to pensioners has hardly moved in years. Don't you wish Congress used that same approach with regard to it's own compensation?
The point I'm trying to get across is that the bill has some good and some bad, so when you evaluate it, do your own research and don't limit yourself to what the nightly news or the headlines say. If not, you'll be surely surprised by the ultimate outcome although, with the Congress we have today, by the time Congress finishes with it, it may look like Swiss cheese and be hardly recognizable. I'll give the President and E for effort subject to the outcome.
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